2023 -- H 6147

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LC000515

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- DEPARTMENT OF BUSINESS

REGULATION

     Introduced By: Representatives Perez, Costantino, Cardillo, Fellela, Baginski, J.
Lombardi, Hull, Phillips, Noret, and Azzinaro

     Date Introduced: March 10, 2023

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Chapter 42-14 of the General Laws entitled "Department of Business

Regulation" is hereby amended by adding thereto the following section:

     42-14-20. Establishment and purpose of exchange.

     The director of department of business regulation, in consultation with the superintendent

of banking and insurance, is hereby authorized to establish a market for low-cost motor vehicle

liability insurance, to be known as the “motor vehicle liability insurance exchange,” the purpose of

which shall be to facilitate making low-cost motor vehicle liability insurance available which meets

the requirements of the motor vehicle reparations act. This exchange shall exercise the powers and

authority of a state-based exchange which shall offer products that meet the minimum requirements

for an owner’s policy of liability insurance for a motor vehicle in Rhode Island.

     42-14-21. Definitions.

     As used in this section, the following words and terms shall have the following meanings,

unless the context indicates another or different meaning or intent:

     (1) “Director” means the director of the department of business regulation.

     (2) “Exchange” or “Motor vehicle liability insurance exchange” shall refer to the motor

vehicle liability insurance exchange established in this chapter, including but not limited to the

provisions of §§ 42-14-20, 42-14-21, 42-14-22, 42-14-23, and 42-14-24.

     (3) “Motor vehicle reparations act” refers to the provisions of chapter 47 of title 31.

     (4)(i) "Owner’s policy of liability insurance" means a policy:

     (A) Affording coverage as defined in the minimum provisions prescribed in a regulation

that shall be promulgated by the commissioner. The commissioner, before promulgating the

regulations or any amendments to them, shall consult with all insurers licensed to write automobile

liability insurance in this state and shall not prescribe minimum provisions that fail to reflect the

provisions of automobile liability insurance policies issued within this state at the date of the

regulation or amendment of it. Nothing contained in regulation or in this chapter shall prohibit any

insurer from affording coverage under an owner’s policy of liability insurance more liberal than

that required by the minimum provisions. Every owner’s policy of liability insurance shall provide

insurance subject to the regulation against loss from the liability imposed by law for damages,

including damages for care and loss of services, because of bodily injury to, or death of, any person

and injury to, or destruction of, property arising out of the ownership, maintenance, use, or

operation of a specific motor vehicle or motor vehicles within the state of Rhode Island or elsewhere

in the United States, in North America, or the Dominion of Canada, subject to a limit, exclusive of

interest and costs, with respect to each motor vehicle of twenty-five thousand dollars ($25,000)

because of bodily injury to, or death of, one person in any one accident; and subject to the limit for

one person, to a limit of fifty thousand dollars ($50,000), because of bodily injury to, or death of,

two (2) or more persons in any one accident; and a limit of twenty-five thousand dollars ($25,000)

because of injury to, or destruction of, property of others in any one accident; or seventy-five

thousand dollars ($75,000) combined, single limit. Any insurer authorized to issue an owner’s

policy of liability insurance as provided for in this chapter may, pending the issue of the policy,

make an agreement to be known as a binder, or may, in lieu of the policy, issue a renewal

endorsement or evidence of renewal of an existing policy, each of which shall be construed to

provide indemnity or protection in like manner and to the same extent as the policy. The provisions

of this chapter shall apply to such binders, renewal endorsements, or evidences of renewal; and

     (B) In the case of a vehicle registered in this state, a policy issued by an insurer duly

authorized to transact business in this state; or

     (C) In the case of a vehicle registered in another state in the name of a nonresident, either

a policy issued by an authorized insurer, or a policy issued by an unauthorized insurer authorized

to transact business in the state of the nonresident’s residence if the unauthorized insurer files with

the commissioner, in a form to be approved by him or her, a statement consenting to service of

process and declaring its policies shall be deemed to be varied to comply with the requirements of

this chapter; and

     (D) The form of which has been approved by the commissioner.

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     (ii) No such policy shall be issued or delivered in this state until a copy of the form of the

policy shall have been on file with the superintendent for at least thirty (30) days, unless sooner

approved in writing by the commissioner, nor, if within that period of thirty (30) days, the

superintendent shall have notified the carrier in writing that in the commissioner’s opinion

specifying the reasons for it, the form of the policy does not comply with the laws of the state.

     (iii) In the case of any ambiguity in the application of the meaning of this term and in

particular the minimum insurance requirements, an owner’s policy of liability insurance shall be

required to meet all the minimum coverage requirements established pursuant to the motor vehicle

reparations act.

     (5) “Proof of financial security” means proof of ability to respond in damages for liability

arising out of the ownership, maintenance, or use of a motor vehicle as evidenced by an owner’s

policy of liability insurance. Proof of financial security may be produced in either paper or

electronic format. Acceptable electronic formats include display of documentation on any mobile

electronic device.

     (6) “Superintendent” or "commissioner" means the superintendent of banking and

insurance as described in §42-14-5.

     42-14-22. General requirements.

     (a) The exchange shall strive to make affordable motor vehicle insurance plans available

to individuals. The exchange shall not make available any insurance plan that has not been certified

by the exchange as meeting the minimum requirements to qualify as an owner’s policy of liability

insurance under the motor vehicle reparations act.

     (b) The exchange shall allow an insurer to offer a plan that provides minimum coverage

amounts required under the motor vehicle reparations acts through the exchange.

     (c) Subject to legislative appropriations, the exchange shall also seek to partner with low-

cost providers and carriers of motor vehicles insurance to seek reduction in premiums charged the

policy holder by having the exchange pay a portion of the policy’s insurance premium. If funds are

sufficient, the exchange may pay the full cost of the premiums. The superintendent shall seek to

develop partnerships with low-cost providers and carriers of motor vehicles insurance with the goal

of supplementing the cost of insurance premiums.

     (d) The director and the superintendent shall promulgate rules and regulations which shall

set forth a sliding scale, based on income, for which persons are eligible for partial payment of their

motor vehicle insurance premiums through the exchange. These guidelines may also include full

payment of the premiums.

     42-14-23. Financing.

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     (a) The department is authorized to assess insurers offering motor vehicle liability

insurance policies To support the functions of the exchange, insurers offering motor vehicle

liability insurance policies through the exchange must remit an assessment to the exchange each

month, in a timeframe and manner established by the exchange, equal to three and one-half percent

(3.5%) of the monthly premium charged by the insurer for each policy under the plan where

enrollment is through the exchange. Revenues from the assessment shall be deposited in a

restricted-receipt account for the sole use of the exchange and shall be exempt from the indirect

cost-recovery provisions of § 35-4-27. Funds in this account may also be used to pay motor vehicle

liability insurance premiums in full or in part.

     (b) The general assembly may appropriate general revenue to support the annual budget

for the exchange to supplement revenues raised from the assessment under subsection (a) of this

section.

     (c) If the director determines that the level of resources obtained pursuant to subsection (a)

of this section will be in excess of the budget for the exchange, the department shall provide a report

to the governor, the speaker of the house, and the senate president identifying the surplus and

detailing how the assessment established pursuant to subsection (a) may be offset in a future year

to reconcile with impacted insurers and how any future supplemental or annual budget submission

to the general assembly may be revised accordingly.

     42-14-24. Regional purchasing and efficiencies.

     (a) To take advantage of economies of scale and to lower costs, the exchange is hereby

authorized to pursue opportunities to jointly negotiate, procure or otherwise partner with motor

vehicle liability insurance insurers and carriers to purchase exchange-offered plans, and to partner

with another state or multiple states and to pursue and achieve the purpose of the exchange.

     (b) The exchange shall issue to individuals who purchase motor vehicle liability insurance

through the exchange, in conjunction with an insurer, a proof of financial security statement. These

statements shall be made both in a paper or hard copy version and an electronic version.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- DEPARTMENT OF BUSINESS

REGULATION

***

     This act would establish the Motor Vehicle Liability Insurance Exchange. The purpose of

the exchange would be to facilitate making low-cost motor vehicle insurance available which meets

the requirements of the motor vehicle reparations act. The exchange shall exercise the powers and

authority of a state-based exchange which offers motor vehicle liability insurance products.

     This act would take effect upon passage.

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